5 transitions that brokers will have to face

5 transitions that brokers will have to face

5 transitions that brokers will have to face

The brokers must adapt to the standards of the regulations which are more stringent, restrictions on marketing and competition is always more aggressive, but they must also reorient their entire thinking and attitude beyond their operational framework.

A transition on a large scale to profoundly alter the DNA of brokers will be essential to comply with the regulations and survive in the new financial climate.

Here are the points of transition of the current dynamics :

The regulations

The european directive (MIFI II) to improve the transparency of the markets, which will enter into force in 2018 will impact strategic, organizational, and technological important for all banks and investment firms.

Many european countries have changed their regulatory standards of the trading, but they are always in search of a delicate balance to protect investors while ensuring the operational viability of the enterprises.

A large part of the regulatory changes which aim at the protection of consumers by incorporating of the advertising restrictions, but not prohibit the use of IB and affiliates, a source of life and important for the industry.

For brokers who use aggressive techniques of marketing and selling with exorbitant bonuses and leverage ratio are very high, the regulatory changes have certainly marked the beginning of the end. These techniques are no longer permitted, the feat to stay afloat becomes almost impossible, because to compete with the industry, brokers must obtain licenses extremely expensive.

To succeed in this new climate, brokers need to refocus and see themselves more as investment firms which aim to serve the interests of their clients. Better regulation means that the broker will have to restructure their configuration financial.

The regulations now require that brokers operating in one jurisdiction are responsible for their brands operating in other jurisdictions. The coordinated effort of the international buffer exists to the point that, if the mark of a broker-dealer in contravention of such regulations in Belize, it will directly affect the status regulatory broker in Cyprus. Previously, it was possible for a Money Maker not HAD to serve as a liquidity provider to a broker in direct treatment. This type of system is no longer viable.


The operational area most affected by the wave of regulatory rigour has been marketing and sales. In Poland, a broker of CFD is required to disclose the ratios of performance of its customers, in Holland and in Belgium, the advertising for the trading of forex in detail it is totally prohibited, while in Spain, as in many other countries, all advertisements must be accompanied by a warning on the inherent risks. In France, the advertising is also prohibited, except for accounts with limited risk not to lose more than the amount invested (the margin used to open a trade).

The brokers also have the responsibility to check if their affiliates are in full compliance with the regulations, since some affiliates also use techniques of sales and marketing, and regulators are trying to reduce. To address this, regulatory agencies now require that the affiliate function as agents attached, which are monitored by the brokers and the regulators.

In addition to the cost to be compliant with the regulations, the cost of the CPA can easily put a broker in a deficit. A strong dependence of the affiliates contributes to a cost of CPA of about $ 600 to $ 700 per client. Brokers who choose to use the advertising Google does not have better results, because the keywords related to the forex industry will cost very expensive.

In addition, the operational and administrative costs are the CPA and a total of some $ 1,100 per customer, whereas the average income earned by a broker by a customer is $ 1,500. The benefit is therefore on average of $ 400, but this amount can be affected by the profits and losses of the trader, implying that even if a profit has been made on paper, in reality, the cash flows of a broker can be much lower.

Given that this is the standard scenario, brokers are under pressure important to improve their margins to ensure their sustainability. Therefore they need to develop networks of internal media assets and establish marketing systems automated, a combination that not only allows you to reduce costs, but also to ensure regulatory compliance. The automated marketing involves maximising the use of available technology to increase conversions, while increasing the life span of traders.

Knowledge and financial expertise

In this current climate, it is no longer possible to sell products by encouraging customers with slogans that promise to earn millions. Brokers must have a thorough knowledge of financial markets and be able to win the confidence of investors.

This implies a transition where the focus on marketing efforts does not concern the field of the sale. Brokers must demonstrate their financial knowledge and their ability to work on the markets, while training and mentoring traders through webinars, e-books, articles and videos on trading.

This is a significant deviation from the previous standard, where in a twist of events, the traders would receive a money manager, leverage and astronomical bonuses that would increase the risk.

This transition to the use of knowledge as a resource is to turn clients into traders who have access to real information and are genuinely positioned for success.

The technology

Most brokers have technology that is limited simply to facilitate trading. To stay competitive while being fully compliant with the constraints of regulatory guidelines, they will have to use technology to automate some services.

Automation tools such as Optim8 and making v8 of Leverate are in the process of development. They allow brokers to offer trading platforms more advanced, to attract a larger number of traders and communicating with these traders in a way which is relevant to obtain rates of conversion and retention rates.

With this transition to technology, human resources, brokers will no longer be made up of a team of sales and retention, but a team competent in technology to implement these tools and ensure their proper functioning for the traders.

This difference is symptomatic of the transition underlying which must take place in the DNA of the brokers.


The ability of a broker to succeed will result in the predisposition of its DNA.

If you want to create a team of football professional, it is not enough that players know how to hit a ball. As a coach, you have to choose the players who have the DNA ideal that predisposes them to play football. In other words, to be successful, a broker should absolutely seek to provide a quality service.

A good broker should not seek to take advantage of the disadvantage of a trader, he should move to the regulatory, finance, education, and technology.

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